Rental Property Investor · Lubbock, TX · Member since 2019 · 34 posts · 14 votes
My business partner and I purchased a SFH, in Lubbock TX for $100k, the Rehab is $40k, the ARV is $210k - $230k. The Issue I am having is my partner is an older gentleman and kind of set in his ways, he is accustomed to fix and flipping even if he holds on to the property for a year. I suggested we do the BRRRR method but he is very apprehensive. What should I do in this situation?
Flipper/Rehabber · Los Angeles, CA · Member since 2019 · 23 posts · 17 votes
6y
@Wes Barnes
Making a business partner satisfied could be better than picking the perfect strategy. Sell it, be happy with your profits, move on to the next deal. And keep your relationship with him/her happy so that if you ever need financing or advice, they can help.
Rental Property Investor · Clovis, NM · Member since 2018 · 118 posts · 55 votes
6y
Sounds like you need to reevaluate your dealings with your partner before executing them. My guess is he wants the easy money now since he doesn't necessarily have the time to wait for a BRRRR to pay off. Keep the partner happy, sell it off, then try to educate him on the benefits of BRRRR.
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
6y
@Wes Barnes can you refinance the property and have enough cash pulled out to pay him off with it?
What’s the split of profits? It doesn’t hurt to ask. Hey if You can get him the expected profit for him would he be ok signing off the property to you. Since he doesn’t want to hold it?
Flipper/Rehabber · Los Angeles, CA · Member since 2019 · 23 posts · 17 votes
6y
@Wes Barnes
Making a business partner satisfied could be better than picking the perfect strategy. Sell it, be happy with your profits, move on to the next deal. And keep your relationship with him/her happy so that if you ever need financing or advice, they can help.
If we do a cashout refinance we would potentially split 35k, the rent for the property is $1800 - $2100 for that area.
Let me reask since I didn’t specify it.
Who paid the 100k purchase price?
Who paid for the 40k rehab?
If you sold it what is your current split % wise of the profits?
I’m saying this because maybe you could refinance it in your name alone and use the cash out money to make him whole as if you had sold it. You leave your unrealized profit in the property as equity and you basically buy him out of the deal. He gets his same money, maybe even a little more since there isn’t realtor fees involved and you get s rental.
Rental Property Investor · Lubbock, TX · Member since 2010 · 55 posts · 17 votes
6y
...or you could have someone buy you out of your position so you don't wait a year to realize your profits and move on to the next. I'm active in the Lubbock market, give me a call; looks like you might have deals I'd like and vice versa.
Flipper/Rehabber · Lubbock, Texas (TX) · Member since 2016 · 63 posts · 36 votes
6y
I don't blame him for not wanting to BRRRR the home. It's a long term game and won't give you quick cash. There are managerial issues if you have a rental in a location where you don't live and maybe he is apprehensive about that too. You may want to save up your part of the profit on a few flips and then do your own BRRRR.
Flipper/Rehabber · Lubbock, Texas (TX) · Member since 2016 · 63 posts · 36 votes
6y
Personally I wouldn't want to BRRRR with a partner because you are tied to them for the life of the property. A flip is shorter term and y'all could decide to separate after a couple flips without any heartache.